Technical Analysis is a MUST! Archives

Well it’s been a while since I’ve written the last post and a whole medley of cool things have happened since!

With so much going on with house moving and sorting things out away from the stock trading world, I’ve still been studying the market and learning lots along the way.

I have NOT made a single trade since my last one of $GBIM, where I was $66 in the red. This is not due to a lack of opportunities in the market as there have been a few although not that many due to a relatively thin market at the moment.

I’ve really been focusing on house moving, Christmas time and other things in my life the past two weeks gone. Just because I have not made any trades recently does not mean I haven’t been watching the market though. I have checked the market every single morning where I can and been studying loads on candle patterns and chart patterns as well as the mother of all important factors of that being Technical Analysis or TA for short!

The picture you see to your left of a rastafarian kinda looking book has got to be the best book I have ever picked up on TA and although it cost $74 on Amazon here I would have happily paid double that!

Interestingly there are some reviews on amazon that say it is a basic book and too simple! I find it funny how those that make such comments are probably still looking for the golden nugget “get rich quick solution book” instead of grasping the simple concepts of what actually works by not only understanding it, but also putting it into practice time and time again!

Anyhoooooows enough about me new book, this is what else I’ve learnt:

New Charting Software and a Better Set Up

So I have been using Finviz in the past to analyse my stock picks and follow the market in general, and although it is very useful and not bad for the price I have stopped using the paid for version as I don’t need it any more because I have found that Investors Hub is soooooooooo much better!

While learning and studying along the way these past two weeks I have also been playing around and searching for better and more efficient tools to use, so that placing my trades is as simple as 1 2 3!

By playing around with my brokerage account (OptionsXpress) I discovered that it has Streaming Xtend, which makes trading a lot quicker and easier to do. I am still fine tuning my trading set up and discovering what works best as I go along, and the more I learn and understand the more exciting trading becomes!

For me, trading the stock market as a whole is fascinating and I love discovering what works best as opposed to just gambling and hoping for the best like many traders do! Like I’ve said in previous posts before; money is the byproduct of consistent successful trading, where preparation meets opportunity!

So this is what my trading set up looks like with OptionsXpress:

Placing my trades will be much quicker and easier to do now that I’ve discovered this, and it looks really cool too!

Anyway moving on, the next best thing that I discovered was the charting software that you get with Investors Hub that I didn’t know about!

By complete luck I accidentally clicked on a small chart while analysing a stock and it brought up a really pretty chart that shows candle information in real time as opposed to delayed which is awesome!

I found that finviz was not reliable enough for real time quotes and the free version of free stock charts was also the same!

So not only have I picked up the holy grail book on Ta, discovered how to optimise my trading set up, but I’ve also discovered that I get awesome real time charting quotes included with investors hub subscription at a cost of $50 a month! Bargain! 😀

Yes I’ve been quiet on my blog here and not made any trades since my last one on $GBIM, but boy have I learnt lots and discovered new cool things.

Overall it has been a fairly slow market with many failed morning spikes overall. There have been some opportunities as well though. I wont go into detail this time on which stocks I’ve spotted lately, but I will say that the Ichimoku cloud is something that I want to study and learn about more as well and will go into more detail on it in another post.

Here’s what I discovered that I get included in the price with Investors Hub subscription:

This charting software you can use for free on tradingview.com, but the free version is NOT in real time and also doesn’t include the Ichimoku add on tool!

So I’m just doing a quick post today and keeping things really cool and super simple 🙂

On a final good pointer:

~Luck is where Preparation Meets Opportunity… which is why I am studying from the best!~

With lots still to do away from trading I’m getting loads done, but I’m also enjoying learning from the best as I understand more and more on how to trade penny stocks successfully, which in turn drives me even closer to success and fulfillment 🙂

With that being said Christmas day is less than 48 hours away, and I wish you all peace and happiness with all the love and joy for you and all your family and friends as well, on Christmas day, through out the holiday season and onwards 🙂

Until next time, spend all the time you can with your loved ones, be forever grateful with what you’ve got and enjoy each others company for ever more 😉

Happy Christmas Everyone 😉

Well today is Tuesday the 1st of December 2015 and annoyingly I got caught in a sneaky bear trap, which cost me $304!! As promised I am here to share ALL my trades, no matter how good or bad they are or whether they are profitable or not! So here’s what happened today……

With my account live and ready to trade I was eager with anticipation to put what I’ve learnt to the test.

I had a watch list of 7 stocks to watch in all this morning, but none of them really moved that much or gave me any reason to place a trade on them so I took a look at what the market was doing with all the pre-market movers.

While looking at the pre-market movers, the two obvious penny stocks that stood out were that of $GIGA and $XOMA. I chose to focus on $XOMA out of the two because I know this stock as it’s on my main watch list and I, and probably many other traders were expecting a short squeeze to happen.

Lesson learnt: Pick the stock with the smaller float!

Subsequently $XOMA did noting at all other than head south and gave me no opportunity to place a trade.

By the time I left $XOMA and moved over to focus on $GIGA, I had already missed the best dip buy opportunity at $2.80-$2.85 area although that being said, it moved very fast and made it a tough call to enter a trade here.

I did not enter a trade mainly because I was uncertain and had no conviction to enter a trade. Whether I am right or wrong, I will only enter a trade when I have a reason too so that way I will build in confidence as opposed to not knowing why I am entering a trade!

So many traders enter a trade without a reason knowing why they are going into it and ask “should I buy here?!” Simply put if you are unsure of entering a trade then you should NOT be trading with real money, you should be practising what you’ve learnt by paper trading first.

Any ways, by missing the action on $GIGA I was glued to my screen looking for other possible plays and noticed several other stocks on the move mid day and missed those as well!

So it was turning into a frustrating trading day, and I really should have gone away and checked back later for the afternoon session, but that’s hindsight for you.

I have been studying how to trade morning spikes, so I really should not have been looking to place a trade once it had gone past mid-day, but that’s another lesson learnt.

This is what happened Next

First off here’s the day’s chart of $GIGA that I missed today:

I should have placed a trade around the $2.85 area, but basically choked and I was too scared to enter a trade and that’s ok! When entering a trade, you MUST be confident and do it with conviction and NOT dither or be uncertain about it or you will struggle to make good trades.

There were a few other penny stocks that did some crazy things today which were that of $ATV $DHRM and also $VHC which unfortunately I chose that of $VHC to trade. I wasn’t that interested in $ATV as it was too high and crazy for my liking so I chose not to focus on it, which is a shame as I could have banked, but that’s hind sight for you!

Here’s the $DHRM trade I missed today:

Here’s the Bear Trap that Caught Me Out!

So why did I get into this $VHC trade?

I spotted this penny stock when it was moving up around the $3.40 area and quickly analysed it’s credentials.

With 46.08 Million shares as it’s public float and around 137 million as the market capital I was happy with these statistics.

What caught my eye most of all is that although there was no major news out on it, it was moving fast and what really caught my eye was the amount of shares that were on the short side of around 12 million!

So with around 12 million shares short and the pace that it was moving at got me anticipating that there was going to be a major short squeeze about to occur.

So with this thesis concluded I waited for it to slightly drop so I could be ready to put my Dip Buy order in.

While looking at my level 2 screen and waiting for a candle with a long wick pointing down, everything was in order and there were also some strong buyers in the room to spike the price back up again.

So once my signals were confirmed I placed my trade and got in at $3.76 with my exit goal being close to $4.

Within seconds it dropped to $3.68 which was ok I thought as there was enough buyers trading to hold support at $3.60 at the very worst!

How wrong I was as it then dropped to $3.51, and by this point I froze and was trying to decide what price I should sell at to cut my loss, but also thinking that it surely has to spike back up as the signals are telling me this with that of the amount of buyers in the room and another candle with a long wick pointing down. Again I was wrong!

Unfortunately as I dithered trying to decide, $VHC tanked some more and before I knew it I needed to abandon ship immediately to avoid disaster by placing a market sell order.

So sadly my market sell order got executed at $3.38 and damaged my spaceship a little with the 38 cents share loss, but it would have been a whole lot worse if I hung on any longer in the hope that it would return to it’s high!

With the surge of volume at 12:58(EST) and the pace that it was increasing at, I was convinced that it would go back up and test the $4 area and I even waited for the dip buy! If I’d taken a closer look at the volume spike from the $2.80 area up to the $3.80 area I would have realised that the volume was not that strong and was most likely just shorts covering their positions. I basically got caught out by the sodding bears!

What I think should ALWAYS be irrelevant to what the market does, as the market is always right.

If I had analysed $VHC properly with technical analysis I would have concluded that this stock has a history of the price dropping right after it has hit it’s day’s high or past resistance, and I also would have realised that $4 was too high a risk to go for from my entry price with the given past clues of this stocks past! If there had been some solid positive news then this could have been a different story, but there wasn’t and my thesis was dead wrong!!

So Where Did I Go Wrong?!

Just like Weird Science..WE FORGOT TO HOOK UP THE DOLL!!! Aka, I didn’t do my past Technical Analysis and ask myself the question: “How has this sock reacted in the past and what is the catalyst today?”!!

These are the 3 Main Rules I Missed Out!

Only enter a trade with a catalyst
How has this stock reacted in the past?
Cut losses immediately no matter what your opinion is!

I am actually happy with my plan of action and that I entered my trade with conviction even though it resulted in a loss, but most importantly I need to NOT be in such a rush to make my first winning trade as being excited to make a winning trade made me skip 2 important check rules!! I could say that I was unlucky, but in actual fact this was a total DUMBASS trade and here’s what I learnt today:

Here’s What I Learnt Today

Only trade Morning Spikes until you have the experience to trade at other times
Only trade stocks with a solid catalyst
Know how the stock has reacted in the past (Always a clue!)
Analyse the whole stock properly (I missed out the Technical Analysis)
Enter smaller trades to begin with to gain confidence and build momentum
CUT LOSSES IMMEDIATELY NO MATTER WHAT!!! Grr still learning this one!
When it goes against you fast, put in a Market sell order IMMEDIATELY!!!
Have a written check list in front of you of what to do before you place a trade so you know the WHY?!

Ok so although it’s annoying to have placed my first real trade since my very first trade back in August and come out with a loss, I have actually gained more experience and knowledge along the way which is very valuable to my success and will improve my trading technique.

I definitely need to be more patient and not be concerned about missing trades. I am going to enter a smaller trade at my next attempt and be more meticulous with Technical analysis on the stocks past performance as well as the risk/reward factor with resistance and support in mind. There will be plenty of other opportunities to make good trades.

So there we have it, this is only my second ever trade with penny stocks while trading with real money and it has resulted not in a fail, but a very big learning curve and best of all I have survived it, learnt a tonne and will be more meticulous with my next trade…….

So on a final note, I can either be cross and upset about my loss and give up now or I can get back up, learn from my mistakes and come back to trading the next day with more experience than before and trade more meticulously!…… I choose to do the latter 🙂

Losing money does suck, but Best of all I know what I did wrong and I’ve gained a tonne of experience to make my next trade a green one 🙂

Oh yeah, and if you meat a BEAR in your tracks while trading, FUCKING RUN!!!

New Charting Software & The Holy Grail of Technical Analysis!